Tax-efficient Isas have become much more flexible since 1 July. Where previously savers could put away only £11,880 annually, they can now save up to £15,000 every tax year.
A quick calculation by Tyne and Wear financial adviser John Bloomfield shows that if you are able to put the full £15,000 away each year, and enjoy a consistent 7 per cent return after charges, it will take you 28 years to break that £1 million barrier.
This shows it is possible, but not exactly an easy task. First of all, you would have to contribute the maximum possible amount in each of those 28 years.
Two investment experts speak to Michael Trudeau and share three example portfolios for adventurous, medium-risk and cautious investors. Can you become a Nisa millionaire?
Jason Hollands, managing director of communications, Bestinvest
Thirty per cent of my example portfolio is in two UK equities funds, both of which invest in large, small and mid-sized companies. In practice these funds provide much higher exposure to small and mid-caps than a bog standard UK equity fund, which is why I haven't included a small-cap fund in the portfolio.
The US represents over half of world equity markets, so deserves a place in any long-term portfolio. The manager of GAM Star GAMCO US Equity, Mario Gabelli, has a long and impressive track record.
European exposure is via Henderson European Focus, a relatively small fund with a major theme in pharma, where there is a lot of bid activity at the moment.
Japan is cheap and a value play, rather than a growth market. Here we favour another veteran investor, Stephen Harker of GLG, who targets undervalued large-cap stocks. For developed Asia exposure we have selected Schroder Asian Alpha Plus. This is a pretty concentrated portfolio of circa 50-70 stocks.
Finally, for diversification purposes I've include a fixed-income fund and a property fund. For commercial property exposure I've chosen the London and South East focused Henderson UK Property fund.
Raj Shah, director of advisory firm Blue Wealth
Passive investor, medium risk profile
Vanguard Life Strategy 60 is a globally diversified fund with 60 per cent of its assets in equities and 40 per cent in fixed interest.
It uses Vanguard's passive trackers, and is a very cheap off the shelf portfolio at 0.29 per cent fund charge per year.
LifeStrategy funds capture the main benefits of a globally diversified portfolio with a single dealing fee, although they are entirely missing refinements such as commodities, property or small-cap and value shares. Rebalancing happens without you needing to lift a finger, providing built-in risk control.
The portfolio has returned an average of 5.9 per cent each year since 2006.
Cautious investor looking for active management
7IM AAP Moderately Cautious is an active fund that invests in a mixture of passives. It is able to hold up to 35 per cent in shares and has a charge of 0.69 per cent per year.
The fund aims for total returns, mainly by way of income with some capital appreciation. It comprises three core portfolios, bonds and equities, alternatives, and a tactical overlay that can be made up of any asset class.
The core portfolios aim for maximum returns with a moderately cautious risk level, reviewed annually.
7IM have a well experienced team and the active overlay over a passive portfolio appears to work. Is it worth paying an extra 0.4 per cent a year compared with the first option?
The portfolio returned 6.14 per cent on average since 2009.
In these portfolios you need to contribute £15,000 a year for 30 years to amass £1 million.
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